GM offers financing to subprime buyers
In an effort to boost sales, the automaker targets buyers with less-than-perfect credit.
By Joe YoungGeneral Motors (GM) will continue efforts to increase vehicle sales and is expected to release another purchase program for buyers with low credit scores.
This same program was introduced back in 2010 after General Motors purchased AmeriCredit Corporation for $3.5 billion in an effort to gain access to subprime buyers. At the time, General Motors didn't have the same access to subprime lending as other companies like Honda (HMC) or Toyota (TM), and subprime buyers only made up about 1% of total GM vehicle sales, versus 20% of Honda sales.
General Motors' subprime buyers have grown to more than 8% since the purchase of AmeriCredit, and now the carmaker is about to release the program again. Vehicles included in the promotion are likely to include 2012 models of the Chevrolet Malibu, Cruze and Silverado. Should the program follow the same guidelines as it did in 2010, annual percentage rates (APRs) will be near 12%, with money down for buyers with a credit score lower than 650.
General Motors showed soft vehicle sales during the second quarter of 2012, reporting only modest growth of 1.4% from the year-ago period (falling far below analyst expectations of 11%).
According to JPMorgan, brand-specific vehicle sales showed Chevrolet sales up 1%, Cadillac up 31%, Buick down 8%, and GMC down 1%. Since the program is aimed mostly at budget-priced Chevrolet, General Motors may hope to see sales grow akin to Cadillac's numbers.
General Motors has been in the news regularly over its management changes, vehicle sales, new partnerships and its "Chevrolet Confidence" program, which offers haggle-free pricing on all 2012 model Chevrolets through September 4. All 2012 to 2013 model Chevrolets will be sold with a money-back guarantee of 30 to 60 days after the sale, with less than 4,000 miles. This program was unveiled previously in 2009.
But the automaker has managed to avoid news of recalls, unlike Ford (F), Honda and Toyota. So perhaps "Chevrolet Confidence" has meaning for both buyers and the seller. General Motors stated that there will be no change to its current marketing strategy, according to The Detroit News. Understudy Global Chief Marketing Officer Alan Batey announced Wednesday that the company will continue to moving forward, despite the departure of marketing guru Joel Ewanick.
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Just because someone has bad credit does not mean they can't make payments now. Past credit problems has nothing to do with the here and now. If they can prove they make the money for it, lend to them. This is why housing is still in the toilet. If credit was opened up to people with bad credit, houses would be moving. The problem last time was no one had to prove they had the income to make the payments. If people are making the money to make it, give the loan as long as the bad stuff is at least a year old. People with great credit defaulted on their loans just as much as people with bad...Why? Cause they didn't have the income to make the payments!
What a messed up system we have to live by that people are judged by a credit score especially in this economy that thousand of americans have lost their homes because they lost their jobs, we have been measured and judged based on something that we had no control over so once the economy improves people will not be able to pick up and start over again because they have a 580 score and it might take 10 years to bring up their score because the credit card companies are greedy and they charge outrages fees,the only thing our government did was bail out all the big corporations the same companies that took advantage of the working class nothing has been done to help the working people, why is it that we are such an open country and our government has sent millions of dollars over seas and our people are homeless and can barely feed their families how many products do we have that are actually made in the U.S. everything we buy is always made in Japan or China no wonder our country is in this financial mess.
Over the past 20 years, I have taken 3 GM cars to well over 200K miles each, with few problems. It slays me, that people that bought a lower quality GM car back in the 80's (and everyone was making lower quality back then), can't give GM another chance. But they can forget that it was Japan, and their manufacturers, that fought a war with our country, killed our people, our relatives, just 67 years ago....and they scamper down to the local Toyota/Honda dealer, throw them their money, and thumb their noses at GM and Ford. There....I feel better.
It hasn't gone down the drain. It is still very prevalent. It's just that the American dream isn't for Americans anymore. It's for everyone else who ISN'T an American. For everyone born and raised here, it is more like the American nightmare.
And for the record, 12% interest isn't the worst. In fact, I believe that is very doable. 5 years ago when I purchased a "new" used car from a dealer, I did not have bad credit. I only just barely had any credit at all. I never got into the credit card thing, and my very first car was cosigned by my father. Between the two of us, we made all payments on time. My credit never budged, even though I made payments as well. I was in dire need of a new car and had to finance. So I ended up with a 17.5% interest rate. I am paying $365 a month for a car that should only be costing me $230 a month.
Someone tell me how THAT is fair? I defaulted on many of these payments, as I do not have a job that pays me much more than my cost of living. So my already barely existing credit, has now tuned into HORRIBLE credit, at already a 17% interest rate.
It's not always the individual...the credit system needs an overhaul. It's great that some people are raised to be mindful and wary of credit, and have guidance at a young age...but some of us aren't so lucky. If it isn't treated with a white glove, it will kill you. Some of us never had white gloves.
I would take a 12% interest rate in a heart beat. I tried re-financing my vehicle and no one would take a lesser interest rate than what I was already paying. The idea that if I had a lower interest rate, I would have no issues with my payments, is not something banks/credit agencies want to hear. I guess it's a line used too often, by insincere individuals. So people like me are left out to dry.
Not everyone who has a bad credit score is to blame for their low number. Sometimes there are errors on their credit reports, ID theft may have befallen them, a payment is in dispute with a vendor, or an accident or serious illness caused late payments. It doesn’t take much to knock down an otherwise exemplary credit history. In my case, I cosigned all our children’s college loans so they would have a reduced interest rate. No problem except for one who decided not to pay any of his college loans and let them go into default. Over $80,000 is owed and I am retired and on a fixed income so there is no way I can repay that amount. Needless to say, my exemplary credit score of 780+ I had for many years went down the flusher – even though I continue to pay everything else in full and on time. Assuming I could pay the college loans I cosigned, by the time they are paid and finally removed from my credit report, I will be long dead. Such is life.
Today a bank, credit card company or a car dealership would laugh me out the door if I asked them for a loan. At least GM is willing to extend credit to those who have found themselves in an unfortunate financial dilemma.
The Middle Class credit scores took a hit during this recession, but GM is targeting them because many of the Middle Class still hold employment. GM realize that the Middle class are the main ones that will buy their cars. Why not give them a car with less than perfect scores, it was some of their tax dollars that bailed out GM.
I approve of this, I had a a few $8.00-$10.00/hr Jobs for a very long time, have struggled with money for 15 years, 5 years ago I got a job Bringing home $1800-$2200 every 2 weeks, after 5 years im still working on all that damaged credit and still only have a 580 score.
I think Ill go buy a GMC
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